Arsenal have lost out in the race to sign Gonzalo Higuain with the Real Madrid forward heading for a medical at Napoli after the clubs agreed a £34 million fee.

Rafael Benitez continues to spend the £55m raised from the sale of Edinson Cavani to Paris Saint-Germain. Napoli have also snapped up Higuain's former Madrid team-mates Raul Albiol and Jose Callejon with Italian sports paper Gazetta dello Sport reporting that the duo helped convince Higuain to move to the Stadio San Paolo.

Pepe Reina is also undergoing a medical at Napoli after Benitez agreed a loan deal to reunite with his former keeper at Liverpool.

Higuain was believed to have favoured a move to Arsenal, who thought they had secured the striker's services after putting in a £23m bid.

But Madrid held out for an improved offer which came from Italy, with Higuain waiting to see if Arsenal would match Napoli's bid and meet the new asking price.